International truck makers are facing increasingly tough competition from Chinese commercial vehicle companies, which have already cornered the domestic market and are now aggressively moving on to the export market – especially south-east Asia and Africa.

According to a report released in Shanghai on Wednesday by Alix Partners, the automotive industry consultancy, China last year produced almost half the world’s heavy and medium commercial vehicles due to strong local demand and increasing exports to emerging markets where China’s trucks are priced at less than half those of global truck makers.

Strong growth in production is expected to continue this year, with first-half growth of 76 per cent year-on-year putting China in a position to produce 1m trucks for the first time this year, according to Ivo Naumann, head of Alix Partner’s Shanghai office. 

Fuelled in part by the Chinese government stimulus programme, China was the only major market to show growth in the number of vehicles produced in 2009, up 22 per cent, according to Alix. This strong growth allowed China to boost its share of the global market, by volume, to 49 per cent in 2009 from 20 per cent in 2006.

Foreign truck makers will benefit from recovery in demand in Europe and North America, where Chinese trucks cannot compete because they cannot meet local emission standards.

But in emerging markets – which Alix expects to produce 58 per cent of growth in commercial vehicle demand by 2014 – China’s lower cost and lower technology commercial vehicles are posing stiff competition to global truck makers. Chinese exports of commercial vehicles, mostly to emerging markets in Africa and south-east Asia, rose 25 per cent in the first half of 2010 over the first half of last year, to 134,000 units.  

“The increasing volume for Chinese OEMs has provided enhanced profitability and allows for a larger commitment to R&D, which … will allow these domestic OEMs to compete on a global level,” the report said.

Mr Naumann noted that China’s share of the heavy and medium commercial vehicle market by value is not as high as its share by volume, since Chinese trucks are lower cost than those made by global manufacturers. But even by value, he said, Chinese truck makers represent 25 to 30 per cent of the global market.

Unlike multinational carmakers – who have a two-thirds share of the Chinese market – foreign truck makers have only an estimated 2 per cent share of the commercial vehicle market – excluding light commercial vehicles, which are viewed as passenger cars in China.

“Western commercial vehicle makers have suddenly woken up to the fact that this market is very important and have started partnering up with Chinese producers,” including a recent joint venture between MAN and Sinotruk, Mr Naumann said.

The new ventures will give Chinese companies access to advanced technology which may allow them to compete in more sophisticated markets in future, he said.